Real Estate is one of the most popular ways for people to invest and build long term wealth. The history of investing in Real Estate goes back a very long time, illustrated by one of the most famous quotes regarding the industry:
“Buy land, they’re not making it anymore.”
– Mark Twain
Although this is an oversimplification, the premise still stands strong. Real Estate (and the land it sits on) is a commodity with a fixed supply. With the demand for housing and space for a growing population ever increasing and a fixed supply of land, the basic economic principles apply. Over the long term we see a general appreciation of the value of land and Real Estate. In fact this trend has been accelerating in recent years do to a combination of factors, but if you had invested in Real Estate in the year 2000, the median house price was $119,600 according to census.gov. In 2022 at the writing of this article, that same median house value was $429,000 according to the St. Louis Federal Reserve bank. That’s a whopping 258.70% return in just appreciation without considering if the property generated rental income!
At almost 6% a year from just appreciation on average, that makes Real Estate a good investment on its’ own merit. That return beats most conservative investments you can make, and blows the 0.1% savings account return out of the water.
Real Estate is commonly purchased as an investment property without the intention of the owner actually living there. These properties are rented out to short or long term renters and use the cash flow from them to pay for the expenses of the property as well as extra income on top. These properties still receive the same 6% average that we saw in the previous example from appreciation, but also can generate an additional return of 5-10% more if properly managed.
Although all investments run the risk of losing money, the long term value of Real Estate and its’ great track record make it one of the gold standard investments from professional and seasoned investors around the world. Here at Fundhomes we are working to make this type of investing even more accessible to the everyday person by lowering the amount needed to get started, and diversifying risk to maximize returns and minimize losses for those who are new to the industry. Make sure to invest responsibly and do your research before making a decision to invest. It’s important to remember that sometimes investments lose value in unforeseen market conditions. Although Real Estate has traditionally been considered a safe investment, there have been declines in value during some recessions. Make sure to invest responsibly and do your research before deciding on any investment.